DURHAM – Technology company Avaya, which moved corporate headquarters to Durham from the Silicon Valley region two years ago and recently went through a management shakeup, is now making layoffs.
The beleaguered technology company disclosed that CEO Jim Chirico was “removed” from his position on Aug. 1 and replaced by Alan Masarek. Chirico also resigned from the board of directors, the company said in July.
Later, Masarek warned that Avaya (NYSE: AVYA) might not survive after a devastating earnings report and the failure of a new financing deal. Shares fell more than 11% Thursday morning to $1.79, far below a 52-week high above $22.47. The price has dropped as low as 60 cents. Year-to-date, the company’s stock has fallen by more than 90%, as of Thursday morning.
Tech firm Avaya warns ‘substantial doubt’ about ability to survive; layoffs loom
Cost-cutting measures enacted
“Lowering our costs, including through a reduction in our workforce, is necessary to position Avaya as a more agile and innovative organization and to align Avaya’s cost structure with our contractual, recurring revenue business model,” Masarek told WRAL TechWire in an email on Thursday.
Layoffs had been expected, as the company “set aside” some $11 million in August to cover the costs associated with expected layoffs, WRAL TechWire previously reported.
No mass layoff notice has yet been filed with the North Carolina Department of Commerce under the WARN Act. The company announced in July that it would pursue cost-cutting measures.
A filing with the Securities and Exchange Commission noted that a reduction in workforce along with incremental cost reduction actions is expected to “operationalize more than $250 million of annual cost reductions,” which the company said would allow it to achieve annual cost reductions of between $225 million to $250 million.
The filing also stated that the reduction in force “better aligns the size of Avaya’s workforce with its operational strategy and cost structure.”
Across the state, while the total numbers of layoffs remains small, compared to the state’s total workforce, the pace of layoff announcements has increased in the prior six months, as tracked by the WRAL TechWire Layoff Watch. And, so has worker anxiety about layoffs.
Layoff anxiety is growing: Searches about job losses skyrocket across Triangle, US
What’s happening
The company’s stock share price has plummeted this year, including a further plunge following a Wall Street Journal reported that a $600 million financing plan announced in January 2022 had fallen apart earlier this year.
“The severance package offered was cut by over 25% from the July package,” an anonymous worker wrote on TheLayoff.com.
“They reduced the subsidized [h]ealth insurance from 6 months max to 2 months max. With a family being cut off from health ins[surance] hurts the worst.”
Avaya moved its headquarters to the Triangle in 2020 from California. It has some 8,000 employees spread across numerous operations, WRAL TechWire previously reported.
“I didn’t even get a call from my direct manager I just got email from corporate saying see ya later,” the worker wrote in the comment on TheLayoff.com.
The total number of layoffs made by the company is not yet known. Multiple commenters on TheLayoffs.com said that layoffs were also made in July and indicate that layoffs were made this week, including some by conference call.
“We will minimize the impact to customers with respect to sales and support and remain committed our long-range innovation and product development roadmaps,” said Masarek. “We are committed to treating impacted employees with utmost dignity and respect and seamlessly providing our customers with outstanding communications solutions and support.”
